Month: November 2017

Michael DuCharme has joined Mesirow Financial as director, currency solutions within its currency management business, which provides custom risk solutions, ranging from passive to active currency risk management.
He joins from Russell Investments, where he spent 17 years focused on trading systems and processes. Most recently, he was head of currency strategy, helping clients develop strategies to reduce their FX transaction costs while minimising risk. DuCharme started his career as an engineer, including a tour of duty as a civil engineering officer in the United States Air Force.

With more information becoming increasingly accessible to a wider set of FX market participants, are we witnessing the democratisation of data? Galen Stops takes a look.

The starting point for claiming that data is being democratised in FX, and in the financial markets more broadly, is to point out how much more accessible data has become to a wider range of market participants.

At the retail level, people can use smartphones to find out a currency exchange rate at any time in just seconds. At the professional level, trading firms can now access high-speed market data from numerous sources at affordable prices, while aggregators allow them to rapidly compare the data coming on from these sources.

LCH SwapAgent, a service for the non-cleared derivatives market, has processed its first cross-currency basis swap.

The first trade was conducted between Credit Suisse and Deutsche Bank and was a EUR/USD cross-currency basis swap. The trade was brokered by Icap and processed through MarkitSERV.

This represents the first non-cleared trade to be transacted as LCH STM, SwapAgent’s settlement-to-market legal and operational framework. LCH STM facilitates full and final daily NPV settlement, rather than collateralisation by way of exchange of variation margin, and the netting of such settlement and contractual trade cashflows.

I learnt a new phrase last week, “algo-baiting”, thanks to a former bond trader being fined £60,000 by the UK’s FCA for doing just such a thing. Reading the notice issued by the FCA, however, I find myself wondering why what the trader had done that was deemed illegal?
At face value it looks like an open and shut spoofing case but with spoofing there generally is not an intention to deal – in this case I would argue there could have been.

Wells Fargo has issued a statement in which it “strongly disputes” the characterisation of its foreign exchange pricing as being unfair and unfavourable to its customers, as alleged in a story published by The Wall Street Journal on November 28.
“We informed The Wall Street Journal that their story had fundamental inaccuracies before they published,” says Wells Fargo Wholesale Banking head Perry Pelos. “We provided pricing data and other information that revealed inaccuracies in the story or that were counter to its negative portrayal of our FX business. Our points and views were either absent in the finished story or not taken seriously by the paper.”

This news comes as the value of bitcoin has been skyrocketing, reaching $10,000 per bitcoin yesterday, but rising to over $11,000 today, before falling back to under $10,000. At the start of 2017, bitcoin was valued at around $1,000.

It also comes after announcements from other major exchanges – CBOE and CME Group – that they are planning to list bitcoin futures before the end of this year.

Profit & Loss understands that one way in which Nasdaq plans to differentiate its bitcoin futures contract is by basing the product on an index that uses pricing sources from more than 50 exchanges worldwide.

Profit & Loss talks to Zeus Shaikh, founder of Bear Shaikh, about the legal challenges associated with FX prime brokerage and how firms should be approaching blockchain technology.

Profit & Loss: You now run a “legal consulting firm”. What is that and how does it differ from a typical law firm?

Zeus Shaikh: At Bear Shaikh we’re looking to disrupt the way that financial services firms are serviced. Although there is some overlap between what we and law firms do, there are services that I offer that a law firm does not.

In a speech delivered today to the FICC Markets Standards Board (FMSB) in London, Mark Carney, Governor of the Bank of England (BoE), expressed optimism that new measures aimed at preventing misconduct in the FICC markets are having a significant impact.

These measures, set out two-and-a-half years ago in the Fair and Effective Markets Review (FEMR), are designed to improve confidence in FICC markets after a series of scandals.

“Multiple factors contributed to a tide of ethical drift in FICC markets. Market standards were poorly understood, often ignored and always lacked teeth. Too many participants neither felt responsible for the system nor recognised the full impact of their actions. Bad behaviour went unchecked, proliferated and eventually became the norm,” noted Carney in his speech.

In its latest assessment of the European banking system, the European Banking Association highlights the threat posed by technological advances, outsourcing and data protection.
The results of a risk assessment questionnaire show operational risks remain an area of concern given the challenges EU banks have to face with the rapid development of financial technologies. Based on the questionnaire results, 55 % of respondents foresee an increase in operational risk in their bank compared to 43 % in December 2016 and 35 % in December 2015.

Fluent Trade Technologies has announced it has partnered with Moscow Exchange (Moex), Russia’s main trading and clearing platform for equities, bonds, derivatives and currencies, to provide clients and prospects with simple and secure access to the Moex UAT integration and testing environment.
Fluent is providing full support for client integration, testing and certification requirements. The new service is live, with Fluent certified to provide low latency interface connectivity services for both ‘Fast’ market data and FIX order management to the Moex FX Market.